Domestic partnership

Employers boost tax benefits for same-sex couples

March 26, 2012: 11:24 AM ET

Ernst & Young is one of about 35 businesses that offer tax benefits to same-sex couples, nearly triple the 12 companies that offered it just a year ago.

By Katherine Reynolds Lewis, contributor

FORTUNE -- This is the last tax season that Bryan Parsons, an associate director at Ernst & Young, will have to pay extra income taxes for the health benefits his employer provides to his domestic partner Carlo Iyog.

That's because starting Jan. 1, Ernst & Young became one of a growing number of companies who will compensate lesbian, gay, bisexual and transgender employees for a provision in federal tax law that forces them to pay income taxes on health and wellness benefits for same-sex partners, a sum that heterosexual married couples don't have to pay.

"I'm looking forward to this time next year, when I can go back and do the calculation and see how much money I've saved," says Parsons, expecting that it will amount to a couple thousand dollars.

"There's a huge sense of pride that the firm has taken an opportunity to put its money where its mouth is," he says. "I don't know that there's any monetary figure that could match that."

Ernst & Young is one of about 35 businesses that offer the benefit now -- often called a gross-up benefit -- nearly triple the 12 companies that offered it just a year ago, according to the Human Rights Campaign, the largest LGBT civil rights organization. Other companies that began offering the benefit on Jan. 1 of this year include American Express (AXP), Bank of America (BAC), Microsoft (MSFT), Morgan Stanley (MS), and Yahoo (YHOO), according to interviews with spokespeople.

The problem the benefit aims to address occurs even in the eight states that legally recognize gay marriage. That's because federal tax law treats those couples as unmarried due to a provision in the Defense of Marriage Act. More

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